The US Department of Transportation has rejected Pennsylvania's proposed tolling of Interstate 80 as a means of generating over $400 billion in revenue to reduce the state budget deficit. The decision is the first Obama administration ruling on a controversial tolling project. It comes as a significant blow to Pennsylvania Governor Edward G. Rendell (D) who announced the federal decision at a press conference yesterday.

I-80 is a heavily traveled commercial link between New York and Chicago. Last October, state officials filed an official memorandum with the Federal Highway Administration (FHWA) seeking to erect toll booths on the 311 mile route not for upkeep of the route itself, but for spending elsewhere. The Bush administration, which strongly advocated the use of tolling, nonetheless rejected Rendell's plan because did not meet the requirements laid out in federal law for conversion of a federal interstate into a toll road.

Rendell has gone all out in lobbying for the right to convert the freeway into a revenue generating route. His former deputy chief of staff, Roy Kienitz, even took the high-ranking Undersecretary for Transportation Policy position at US DOT. Kienitz is a board member for "Building America's Future," a group that lobbies on behalf of government officials to promote toll roads as infrastructure projects. Rendell also credited Kienitz for the state legislation that authorized the governor to ask permission to collect tolls on Interstate 80.

The pro-tolling interest groups faced opposition from a bipartisan group of lawmakers at both the state and federal level. The legislators armed themselves with a Grove City College study that found a 10 cent gas tax increase would raise $600 million at a cost of just 0.5 cents per mile for an average automobile -- far cheaper than the per-mile rate of a toll road that requires expensive overhead to operate (view study).

Rendell expressed interest in reviving private public partnership deals. The governor earlier had proposed a long-term lease of the Turnpike to foreign companies to cover the state's short-term funding gap.